Savvy Avi

Jay Forrester , the founder of System Dynamics, a man regarded by many as a legend, was a guest lecturer in SDM ’s System Design class. At 92, Forrester is still relentless at finding the true implications of public policies through system dynamic simulations and working to correct policy. His work in the 70’s and onwards on the limits to growth led him to believe that people are consuming and growing beyond the world’s capacity and that disastrous consequences will follow. The implication of this belief is harsh; humanity should stop striving for growth and instead maintain a net growth of zero. Most extreme opinions are a product of dichotomous “black and white” thinking. This case is entirely different. Extensive research, innovation and his boldness to face an unpleasant revelation created this extreme view. Forester realizes that it is futile to lobby for such changes. Policy makers cannot radically change the direction of policy without a strong support of constituents. T...

eMbrace venture which I am a part of started as a project in Product Design and Development class. It is mentioned in the last SDM pulse in an article by the class's professor Qi Van Eikema Hommes: “one team in this year’s class started out with a technology—an RFID tracking device—rather than a need. Team members wanted to design a web-based system to track everything from documents to parts and information. In class, the students were urged to find out why the world would want their system. Using techniques learned in class, they interviewed and observed people, ultimately identifying a need among parents who sometimes lose their young children in busy areas. The team felt that these parents would like anyone who finds their child to be able to contact them quickly. Based on this need, the students developed an attractive RFID bracelet for kids and a companion web-based tracking system. The team is now exploring the possibility of collaborating with Verizon to produce such a sy...

Molded after the popular Sloan experimental courses (e-Lab g-Lab) SLAM lab (System Leadership and Management) is a course offered only to SDMs. Students consult Cambridge technology firms with strategic decision making. The course, offered in fall, has a summer preparation course adequately called pre-SLAM lab. During the summer course, the class is presented with cases about MIT spinoffs: E Ink, A123 Systems, Ember. All the cases have been written by Harvard Business School. I think I have spotted a pattern: MIT incubates companies and HBS writes case studies about them. Professor Michael Davies, who teaches the class, is the most charismatic lecturer I have had so far at MIT. Pre-SLAM class is always entertaining but when class ends I am not always sure what I’ve learned. One lesson I did pick up is that even very smart people can make stupid decisions. People are ‘prisoners’ of their own history and tend to bias strategic decision with emotional ‘reasoning’. I have seen it in poli...

As a blog writer I am interested in viewing who, if at all, is reading my blogs. I installed a tracker. I use tracemyip.org but Google analytics and probably many other sites provide similar services. So now I know a lot about you. I don’t know your identity but what I can tell is your approximate location, through IP address, the links or search words you used to get into my blog and even your browser, OS and screen resolution. I was surprised to find out that in several months I had a few hundred readers. In a typical day I have two or three readers one of which is a first timer. 70% of the readers come through SDM, which for me means more of my blogs should be SDM related. Other readers either come from Google search with searches related to my latest post title (“up on the bridge”, “performance based bonuses”, “credit defaults” are some examples), from LinkedIn or from looking me up directly (probably family and friends). The last category of entries to my blog is crawlers; the we...

Performance based bonuses (PBB) is an effective management tool but quite often it causes unintentional effects. PBB are supposed to improve productivity by compensating employees according to their contribution to productivity. However organizations are complex systems and it is impossible to measure an employee’s contribution accurately. Companies are forced to use performance models that are a simplification of reality. As a result, employees are focused on maximizing performance under the model which not completely aligned with the benefit of the company. In banking, for example, the bonus models underemphasized risk, causing a worldwide catastrophe. Leaving the financial crisis aside, there are other common pitfalls. It is simple to construct performance-based contribution for sales representatives. The more they sell the more they earn – simple. It is much harder to construct a model for back-end functions, say an IS developer. This is where it gets messy. Measurement by schedul...

As engineers, many of us at some point contemplate founding a start up. For most, it is nothing more than a thought and for a sound reason – we know the start up success rate. However, if you are anything like me a dormant entrepreneurial seed lingers in the back of your brain. Product Design and Development, a foundation course in MIT’s System Design and Development program, encourages experiments in that direction. The course reviews the product development process starting with deriving user needs and on to designing a concept and prototype. Interesting guest lecturers come to speak to class such as industrial designer Matt Kressy who talked about rapid prototyping and Yoav Shapira a startup VP who talked about agile development. Class teaching is followed by a semester long project to come up with a new product. Each group receives $800 to create a prototype. At the end of the course there is a competition and the winners receive a small budget to continue with the product devel...

Another nail to the coffin There is much hustle in Brussels as the EU market commissioner proposes steps to curb swap trading. The German chancellor presses for tighter EU regulations on hedge funds. In the UK, we are told, regulators seek tools to “burst dangerous asset bubbles before they are built”. Four banks, including JPMorgan Chase my employer, face trial over sale of derivative to Milan municipality, allegations that echo the role investment banks had in fueling Greek debt. It’s interesting that in the Greek and Italian stories the banks are cast as villains and public sector as a defenseless simpleton. But what is really amazing is that all these stories are reported in just one Financial Times edition. Things are moving at a dizzying pace. Financial policy is going through an overhaul. Aiming at the wrong target Meanwhile in the US, where the villains are the same but the simpletons are the homeowners, there is talk of a new regulatory body, the Consumer Financial Prote...